Navigating Uncertainty Through Resilience, Absorptive Capacity and Adaptive Performance in Shaping SME Exit Intentions in the Tourism Industry

Abstract

This research examines how absorptive capacity and adaptive performance address the connection between entrepreneurs' resilience and their desire to leave their businesses among Small and Medium-sized Enterprises (SMEs) in the tourism industry. Specifically, this study focuses on tourism SMEs in Terengganu, Malaysia, a region heavily dependent on tourism as a key economic driver. The study integrates multiple constructs within the tourism entrepreneurship domain, including resilience, absorptive capacity, adaptive performance, and business exit intentions. A survey was conducted using self-administered questionnaires between October 2023 and December 2023, with valid responses from 205 tourism SMEs. The data were analysed using Partial Least Squares-Structural Equation Modelling (PLS-SEM). The results demonstrated a significant relationship between entrepreneurial resilience and the intention to exit the business, with absorptive capacity and adaptive performance acting as key mediators. The findings provide insights into how resilience helps entrepreneurs navigate challenges, sustaining their businesses amid uncertainties. The study offers strategic implications for tourism entrepreneurs, policymakers, and industry stakeholders by emphasising the importance of resilience and adaptive strategies in reducing business exit intentions. These insights contribute to a broader understanding of how entrepreneurial resilience, absorptive capacity, and adaptive performance interplay to influence critical business decisions, which can inform policies and interventions aimed at enhancing SME sustainability, particularly in emerging tourism markets.